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Alan Finkel sees a big role for solar, batteries in the changing energy grid

Alan Finkel sees a big role for solar, batteries in the changing energy grid

The Finkel review's expectation that wind and solar power and distributed energy will play a bigger role in households and firms will accelerate the revolution of the energy and transport systems, energy entrepreneurs said.

"It's certainly going to push the electrification and decentralisation of everything, from electric vehicles to cleaner power, all which will need a more decentralised and smarter grid," said Phil Blythe, chief executive of Greensync, which develops software for managing "behind the meter" energy. The Finkel review projects that renewable energy – wind, solar, hydro, biomass – will meet 42 per cent of electricity demand by 2030, up from about 20 per cent today, and a massive 65 per cent by 2050, driven by the plummeting cost of wind and solar relative to coal.

It advocates new incentives for energy consumers to participate in "demand management" of distributed or "behind the meter" energy to return surplus power to the grid to meet rising energy demand, lower costs and help to avoid blackouts like the ones that plagued South Australia last summer.

More than a third of power capacity is expected to be behind the meter – batteries and solar panels on people's homes and business premises, smart software systems and thermostats on energy hungry pool pumps and air conditioners – by 2040, Bloomberg New Energy Finance says.

"Distributed markets will quickly supply the majority of electricity to residential and small business customers, with wholesale markets supplying the differential power, at increasingly skinnier margins," said Jemma Green, chair of Perth firm PowerLedger ,which is trialling peer-to-peer trading of energy using a blockchain.

Mr Blythe said the review clearly spelt out the need for systems that respond to demand situations, such as very hot days, to play an increasing role in security and reliability to balance the growth of less consistent renewables.

Bureaucracy

But Luke Menzel of the Energy Efficiency Council warned that similar recommendations were held up by the Australian Energy Markets Commission and the Australian Energy Market Operator in the past.

Coal power generation falls to 53 per cent of the total by 2030 from about 70 per cent today, and to just 24 per cent by 2050 under Finkel's suite of policies including the Clean Energy Target.

It would also require new wind and solar projects to bring their own firm supply and grid stabilising services to the grid – storage inertia, frequency and voltage control – boosting demand for batteries.

Mike Ottaviano, chief executive of Carnegie Clean Energy, said the wave energy and battery group had based its business around integration of renewables and battery storage and looked to Canberra for leadership in implementing the Finkel review.

"Coal is just not an economical option for Australia anymore. Renewables and storage are no longer the future of energy in Australia, their time is now," Dr Ottaviano said.

The Finkel review says rewarding consumers for demand management and the power they generate, combined with improved energy efficiency, will help reduce consumers' electricity bills.

Stability

But increased behind the meter energy poses challenges for network stability, and the review proposes that by mid-2019 the AEMC propose rule changes "to better incentivise and orchestrate distributed energy resource participation to provide services such as frequency and voltage control".

AEMO is working with the Australian Renewable Energy Agency (ARENA) to pilot a new demand response market. Software developers such as Greensync, Reposit Power and PowerLedger, and retailers from Mojo Power to AGL Energy, are working on their own demand response and distributed energy commercial trials and services.

The review says providing appropriate rewards to consumers large and small for reducing their demand when needed will mean energy system upgrades and new generation will be achieved at lowest cost and customers will have better access to information to support consumer choice.

"Prices for all consumers, not just those who own solar panels or batteries, will be lower than they would otherwise be. Demand management, better planning and data sharing will reduce the need for expensive upgrades to the transmission and distribution networks.

"Prices for all consumers, not just those who own solar panels or batteries, will be lower than they would otherwise be. Demand management, better planning and data sharing will reduce the need for expensive upgrades to the transmission and distribution networks.

Financial Review

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